The Bank of Jamaica’s (BOJ’s) move to enhance corporate governance in the financial sector has resulted in more financial holding companies (FHCs) restructuring their boards to create more independence amongst the group subsidiaries.

JMMB Group Limited (JMMBGL) updated the market last Wednesday that there would be changes to the boards of JMMBGL and JMMB Financial Holdings Limited (JMMBFHL). Under this reorganisation, some JMMBGL directors will resign from the group board while remaining on the FHC’s board while some directors will remain on the group board but leave the FHC board. These changes all involve independent directors.

As a result, Andrew Cocking, Hugh Wayne Powell, Vinroy Andrew Whyte, Dr Muriel Anne Crick and Reece Kong will resign as JMMBGL directors on December 31 but will remain on JMMBFHL’s board of directors. Audrey Deer Williams and Audrey Welds will remain JMMBGL directors but will leave JMMBFHL’s board on December 31.

“The separation of board responsibilities is designed to facilitate more focused and effective governance for each entity, allowing for tailored strategic direction and risk management in line with their respective mandates. By clearly delineating the roles and decision-making authority of each board, the group can better safeguard its stakeholders’ interests and comply with regulatory requirements, such as those outlined in the Banking Services Act 2014,” JMMBGL stated in its Jamaica Stock Exchange (JSE) disclosure.

These changes will result in JMMBGL’s board moving from 15 to 10 directors with half being independent directors, including chairman Dr Archibald Campbell. JMMBFHL’s board will also be reduced from 15 to 13 directors with ten independent directors. The various financial subsidiaries under JMMBFHL all have independent directors chairing the respective boards.

The move by JMMBGL to restructure its board and strengthen governance forms part of the BOJ’s move to enhance independence between the boards of holding companies and operational subsidiaries. These changes not only seek to minimize potential conflicts of interest but ensure that each subsidiary improves its risk management practices to act in the best interest of its relevant stakeholders.

In October 2024, the Financial Institutions Supervisory Division of Bank of Jamaica told the Jamaica Observer in an emailed response, “This policy position signals the BOJ’s intention in updating the current legislation to require that majority of the board’s membership comprise independent directors. In keeping with the aforementioned Corporate Governance Guidance, the BOJ expects that FHCs and their subsidiaries compose their respective boards in a manner that will allow for operational independence.”

NCB Financial Group Limited (NCBFG) appointed Lance Dominic Rampersad as a director on December 4. Rampersad, who already serves as a director of Guardian Holdings Limited (GHL), became the sixth independent director of NCBFG’s board of directors which is now composed of nine directors. National Commercial Bank Jamaica Limited (NCBJ) appointed David Roberts, Allison Cole Philbert and Roger Blissett as its latest independent directors to its board.

NCBFG moved to strengthen the independence amongst its board and its subsidiary board in early 2024 which reduced the number of independent directors that sat on both boards. Gary Brown currently serves as the lead independent director for NCBFG and NCBJ while Michael Lee-Chin, Robert Almeida and Bruce Bowen sit on both boards.

GHL shareholders elected Colette Delaney to its board of directors at its May 2025 annual general meeting. This pushed GHL’s board of directors to 12 directors with half of the board being independent, with Charles Percy serving as the lead independent director. Brown and Delaney are former chief executive officers of CIBC Caribbean Bank Limited (former FirstCaribbean International Bank Limited).

Scotia Group Jamaica Limited (SGJ) also saw a similar strengthening of board independence earlier this year. Prior to the March 2025 AGM, 10 of the 12 SGJ board members were independent directors. Eric Crawford, Angela Fowler and Evelyn Smith retired as independent directors of SGJ’s board but remained on the board of the Bank of Nova Scotia Jamaica Limited (BNSJ). As a result, SGJ’s board of directors now consists of 11 directors with four being connected to The Bank of Nova Scotia (Scotiabank) and the other seven directors being independent directors. BNSJ’s board now has eight directors with six independent directors, with Crawford as chairman. Audrey Richards, an independent director, also chairs the boards of Scotia Investments Jamaica Limited and Scotia Jamaica Life Insurance Company Limited.

This level of independent director separation in governance continues to become more pronounced across the financial sector between group holding companies, FHCs and operational subsidiaries. There are seven approved FHCs in Jamaica with Barita Financial Group Limited being the latest FHC to be formed.

The BOJ has outlined in various financial stability reports its moves to not only improve consolidated supervision across the financial sector, but also enhance the regulations for FHCs to reduce risks in the financial sector.

Some of the other items in the work for FHCs include capital and liquidity requirements which are meant to address prudent capital allocation and addressing risks like regulatory arbitrage and double gearing/double leverage. Additional standards to be developed includes prudential standards for solvency, liquidity and large exposures and related parties.

There is also a push to implement liquidity coverage ratio (LCR) for FHCs which would somewhat mimic the reality for licensed deposit taking institutions. The LCR, effectively, is a measure of a bank’s high-quality liquid assets relative to its net cash outflows over a 30-day stress period.

If a bank had $1 billion in net cash outflows in a 30-day period, the bank must have $1 billion in HQLAs to pay depositors. The proposed change by the BOJ would require a bank to hold $1.2 billion in HQLAs to meet the demands of depositors under that 30-day stress period.

While these governance changes only serve to better serve the Jamaican public, the additional regulatory changes between FHCs and their subsidiaries has seen one CEO call for better collaboration with respect to regulation and the sequencing of these changes. This was requested due to the potential regulatory burden being imposed on regulated entities which are one of the highest taxed entities in the country.